Tag Archives: RMS

Exceedance 2017 – Coming in Just a Few Weeks!

It’s hard to believe but Exceedance 2017 will be here in just a few weeks, and the excitement is building!

Exceedance_6Feb2Many companies are sending their cross-functional teams to fast track their ability to put new capabilities to work. And with good reason. With the releases of Risk Modeler on the RMS(one)® platform and Version 17 in April, attendees will experience more tracks (22) and more sessions (105) than in previous years.

There will also be many opportunities for interaction with model experts, up close team training, networking opportunities, and so much more. Enabling your success is the driving force behind Exceedance!

Here are some highlights of the topics we are preparing for you and your team:

  • Risk Modeler powered by RMS(one): You will obtain a deep understanding of the modeling and analytics that provide the core of the Risk Modeler workflow, including setting up analyses, creating structures and positions, and accessing models from multiple RiskLink® versions for key use cases such as change management, modeling reinsurance programs, and analyzing insurance portfolios.
  • Version 17 North America Earthquake: The changes to the North America Earthquake Models represent the latest view of risk across the U.S., Canada, and Mexico. We will provide the full scope of the update by delving into the model components, including our unique implementation of the latest source models from the USGS, directional loss changes by region and line of business, and detailed loss change exhibits.
  • Event Response: How did your business respond to Hurricane Matthew? Learn what we are doing to enhance RMS Event Response, including future offerings, making it work for your business, addressing the main challenges faced during a real-time event like Hurricane Matthew, and more.
  • U.S. Flood Model: Flood risk management is becoming an increasingly important peril to manage for the insurance industry in the U.S. We’ll provide the latest details on all model components, including the simulation-based model methodology, the innovative vulnerability components of the upcoming RMS U.S. Flood HD Model, and how best to capture opportunities in the evolving U.S. flood market.

The Lab at Exceedance: Solutions, Model Releases, and In-Depth Training with RMS ExpertsExceedance_6Feb

The Lab will be packed with our latest modeling and software releases, in addition to special areas dedicated to research from Horizons (RMS scientific publication) and resilience initiatives across the globe. Over 50 RMS scientists and modelers will be in The Lab to offer technical insights, training, and support – and will be available for personalized discussions.

There’s a Lot to Be Excited About

This is an important year for all of us in the industry, and RMS is ready to meet our commitments to you as we remain on track for a full schedule of delivery throughout 2017. If you’re attending, be sure to let your colleagues know about all Exceedance has to offer.

To see the full agenda with information about the tracks and sessions, The Lab, speakers, networking events, and more, visit the conference website at: exceedance.rms.com. You can also register for Exceedance here. Look for our next blog with more exciting Exceedance updates in the coming days!

Exceedance 2017 Sessions Have Been Announced

As our event team and subject matter experts continue preparing for Exceedance 2017 in New Orleans on March 20-23, we have announced the sessions for this year’s event.

With the release of Risk Modeler on the RMS(one)® platform and the Version 17 models in April, the Exceedance 2017 agenda is strongly focused on providing attendees with training and enablement that will strengthen their company’s operational effectiveness, agility, and resilience, and create new growth for their business.

 

 

Twenty-two tracks with 105 Sessions Focused on Software, Model Releases, and More

Each of the 22 tracks provide a deep dive into our 2017 modeling and software releases. Attendees will have the unique opportunity to learn, train, and interact with RMS and industry experts. They’ll come away with actionable insights into new model releases and software updates.

Selected track highlights include:

  • Version 17 North Atlantic Hurricane Model changes. The Version 17 North Atlantic Hurricane Model update spans from the Caribbean to Hawaii. It incorporates RMS reconnaissance and local market studies across regions, plus additional updates in the U.S. This track will hone in on the advances made since Version 15.
  • Version 17 North America Earthquake Model changes. The changes to the North America Earthquake Model are the most important in a decade and deliver the latest view of earthquake risk across three countries. Understanding the model changes will be critical to ensuring that today’s view of risk is brought to market in a timely manner.
  • New tools and solutions to help own your view of risk. Today’s view of risk is ever-evolving, and this track will focus on new solutions, tools, and key insights to address key market needs, including using RiskAssessor™ with Version 17 models.
  • High-definition modeling capabilities. High-definition (HD) models deliver the latest science and modeling capabilities beyond those currently available in the industry. Attendees can get hands-on with new HD models and understand the valuable enhancements they provide.
  • Exposure data, financial structures and positions on the RMS(one) platform. Learn how to manage your exposure data and financial structures and positions on the RMS(one) platform.

If you would like to learn more about all 105 sessions there’s more information here. To register for Exceedance, click here.

With 22 tracks, 105 sessions, and many opportunities to engage with RMS and industry experts to discuss your business imperatives and strategies, Exceedance 2017 is not to be missed. This year’s event offers the chance to join the discussion, learn more than ever before, and get a head start in the marketplace. Look for our next blog in the coming days!

The Cost of Shaking in Oklahoma: Earthquakes Caused by Wastewater Disposal

It was back in 2009 that the inhabitants of northern Oklahoma first noticed the vibrations. Initially only once or twice a year, but then every month, and even every week. It was disconcerting rather than damaging until November 2011, when a magnitude 5.6 earthquake broke beneath the city of Prague, Okla., causing widespread damage to chimneys and brick veneer walls, but fortunately no casualties.

The U.S. Geological Service had been tracking this extraordinary outburst of seismicity. Before 2008, across the central and eastern U.S., there were an average of 21 earthquakes of magnitude three or higher each year. Between 2009-2013 that annual average increased to 99 earthquakes in Oklahoma alone, rising to 659 in 2014 and more than 800 in 2015.

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During the same period the oil industry in Oklahoma embarked on a dramatic expansion of fracking and conventional oil extraction. Both activities were generating a lot of waste water. The cheapest way of disposing the brine was to inject it deep down boreholes into the 500 million year old Arbuckle Sedimentary Formation. The volume being pumped there increased from 20 million barrels in 1997 to 400 million barrels in 2013. Today there are some 3,500 disposal wells in Oklahoma State, down which more than a million barrels of saline water is pumped every day.

It became clear that the chatter of Oklahoma earthquakes was linked with these injection wells. The way that raising deep fluid pressures can generate earthquakes has been well-understood for decades: the fluid ‘lubricates’ faults that are already poised to fail.

But induced seismicity is an issue for energy companies worldwide, not just in the South Central states of the U.S.. And it presents a challenge for insurers, as earthquakes don’t neatly label themselves ‘induced’ and ‘natural.’ So their losses will also be picked up by property insurers writing earthquake extensions to standard coverages, as well as potentially by the insurers covering the liabilities of the deep disposal operators.

Investigating the Risk

Working with Praedicat, which specializes in understanding liability risks, RMS set out to develop a solution by focusing first on Oklahoma, framing two important questions regarding the potential consequences for the operators of the deep disposal wells:

  • What is the annual risk cost of all the earthquakes with the potential to be induced by a specific injection well?
  • In the aftermath of a destructive earthquake how could the damage costs be allocated back to the nearby well operators most equitably?

In Oklahoma detailed records have been kept on all fluid injection activities: well locations, depths, rates of injection. There is also data on the timing and location of every earthquake in the state. By linking these two datasets the RMS team was able to explore what connects fluid disposal with seismicity. We found, for example, that both the depth of a well and the volume of fluid disposed increased the tendency to generate seismic activity.

Earthquakes in the central U.S. are not only shallow and/or human-induced. The notorious New Madrid, Mo. earthquakes of 1811-1812 demonstrated the enormous capacity for ‘natural’ seismicity in the central U.S., which can, albeit infrequently, cause earthquakes with magnitudes in excess of M7. However, there remains the question of the maximum magnitude of an induced earthquake in Oklahoma. Based on worldwide experience the upper limit is generally assumed to be magnitude M6 to 6.5.

Who Pays – and How Much?

From our studies of the induced seismicity in the region, RMS can now calculate the expected total economic loss from potential earthquakes using the RMS North America Earthquake Model. To do so we run a series of shocks, at quarter magnitude intervals, located at the site of each injection well. Having assessed the impact at a range of different locations, we’ve found dramatic differences in the risk costs for a disposal well in a rural area in contrast to a well near the principal cities of central Oklahoma. Reversing this procedure we have also identified a rational and equitable process which could help allocate the costs of a damaging earthquake back to all the nearby well operators. In this, distance will be a critical factor.

Modeling Advances for Manmade Earthquakes

For carriers writing US earthquake impacts for homeowners and businesses there is also a concern about the potential liabilities from this phenomenon. Hence, the updated RMS North America Earthquake Model, to be released in spring 2017, will now include a tool for calculating property risk from induced seismicity in affected states: not just Oklahoma but also Kansas, Ohio, Arkansas, Texas, Colorado, New Mexico, and Alabama. The scientific understanding of induced seismicity and its consequences are rapidly evolving, and RMS scientists are closely following these developments.

As for Oklahoma, the situation is becoming critical as the seismic activity shows no signs of stopping: a swarm of induced earthquakes has erupted beneath the largest U.S. inland oil storage depot at Cushing and in September 2016 there was a moment magnitude 5.8 earthquake located eight miles from the town of Pawnee – which caused serious damage to buildings. Were a magnitude 6+ earthquake to hit near Edmond (outside Oklahoma City) our modeling shows it could cause billions of dollars of damage.

The risk of seismicity triggered by the energy industry is a global challenge, with implications far beyond Oklahoma. For example Europe’s largest gas field, in the Netherlands, is currently the site of damaging seismicity. And in my next blog, I’ll be looking at the consequences.

[For a wider discussion of the issues surrounding induced seismicity please see these Reactions articles, for which Robert Muir-Wood was interviewed.]

Indonesia’s Protection Gap – How the Sumatra Earthquake Shows that Coverage Must Spread

On December 7, 2016, a shallow magnitude 6.5 earthquake struck northern Sumatra in Indonesia, severely damaging or destroying more than ten thousand homes and many businesses, as well as causing over a hundred deaths. The disaster struck a poorer area away from the major cities, where the standards of building design, construction methods, and material quality are not sufficient to withstand such an earthquake.

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USGS Shake map for Mw 6.5 Earthquake

We have up-to-date research on local building design and construction practices in Indonesia, which we have incorporated into the latest version of the RMS® Indonesia Earthquake Model. This research was done last year when members of the RMS vulnerability team, including me, visited southeast Asia as part of the process to update the model. We held workshops with local earthquake engineering experts who practice there, and attended an earthquake engineering conference, as well as visiting commercial and industrial buildings, including those under construction, to see first-hand how they were designed and built.

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A workshop with local experts

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International Conference – Jogja Earthquake in Reflection (May, 2016)

This on-the-ground research provided insights into Indonesia’s rules and practices around construction, seismic design, code enforcement, as well as information on the relative quantities of different types of buildings in the country. We discovered significant differences between mainstream construction and those buildings covered by earthquake insurance, namely:

  • Past earthquakes have demonstrated that single family dwellings and/or low rise buildings are the most vulnerable building types compared to those built for commercial and industrial use, because of a lack of engineering design, poor construction, and lower material quality.
  • Buildings outside of major cities are mostly low rises and they may not be designed for earthquake risk.
  • Major cities such as Jakarta, Bandung, and Surabaya enforce a strict structural design review process for the construction of mid- and high-rise buildings.
  • Insurance penetration rates are higher for commercial and industrial buildings in and near major cities, with much lower penetration for residential properties in rural areas.

It’s perhaps not surprising that if poorer communities have less insurance protection, that they also cannot afford to invest in the higher quality construction that is designed to better withstand earthquakes. This is one of the primary reasons for the ‘protection gap’. As these countries become more developed, there’s the potential for that gap to start closing. In fact, Indonesia is one of the fastest growing economies in southeast Asia, with the property insurance and (re)insurance market expanding rapidly.

But as the earthquake disaster demonstrated, there are still many poorer regions with low insurance penetration which are also prone to repeated natural disasters. Sadly, there is still a long way to go before people in those places benefit from the resilience in their built environment which other, richer parts of the world may take for granted.

Exceedance 2017 Is Coming to New Orleans!

Welcome to the first in a series of blogs leading up to Exceedance 2017, March 20-23.

We’re looking forward to the event, which will be held at the Hyatt Regency New Orleans. Situated less than a mile from the historic French Quarter, and about a mile-and-a-half from Jackson Square, it’s a great location in the heart of the ‘Big Easy.’

This year’s theme, ‘Create Resilience,’ reflects the strength and spirit of New Orleans, including the tremendous progress made in the ten years since the devastation caused by Hurricane Katrina. Exceedance 2017 will emphasize how innovation, analytics, and ingenuity can create more resilience in our global catastrophe risk management practices.

Hands-On Training for Risk Modeler on the RMS(one) Platform and Version 17

With the release of Risk Modeler on the RMS(one)® platform and Version 17 upcoming in April, this year’s Exceedance schedule is focused on training and enablement. It’s the only place to get key insights into these new RMS releases – and be trained to assess risk more effectively.

Exceedance2017Exceedance will feature over 22 speakers and provide many opportunities to dive deep into more than 20 new models, including North America Earthquake, North Atlantic Hurricane, and major advances in science, software, and HD-simulation models.

The agenda is designed to provide attendees with all the information they need for our new solutions developed for a rapidly changing market. Solutions that will increase operational effectiveness, agility, resilience, and business growth.

Take Some Time to Have Some Fun

Along with experiencing all there is to see and learn at Exceedance, there are plenty of opportunities to relax and have some fun with the following pre-conference activities:

Golf at TPC Louisiana: Enjoy a round at TPC Louisiana, rated one of Golfweek’s “Best Courses You Can Play.” It’s a great place for you and your colleagues to experience a one-of-a-kind day on a championship golf course.

Tour the Lower 9th Ward: Join the Make It Right Foundation for a walking tour of the Lower 9th Ward. You’ll experience first-hand how innovative partnerships and community-led design sessions are transforming the neighborhood that was most devastated by Hurricane Katrina.

Horse-Drawn Carriage Ride and Cooking Class: Journey through the French Quarter by carriage, where you’ll pass through the city’s eighteenth- and nineteenth-century French and Spanish architecture. Then, satisfy your appetite with chef extraordinaire Amy Sins who will guide you through an interactive culinary experience that ends with a delectable meal.

Spirits and Spirits – an Evening Tour: Take a guided evening stroll through the spooky side of the old French Quarter. You’ll hear tales from the city’s storied history, and perhaps even encounter a ghost or two. Then enjoy local cocktail favorites at one of New Orleans’s oldest restaurants, a former Spanish armory.

To learn more about these events, visit the Exceedance website. If you’re ready to register, fill out your form.

Exceedance will be here soon, so look for our next blog in two weeks. It will include the latest information on the session tracks and content, as well as details of the keynote speakers.

Customers Adopt Solutions on the RMS(one) Platform

Exposure Manager, the first solution on the RMS(one)® platform, launched in July and has created great momentum in the market.

Insurance and reinsurance firms using Exposure Manager gain a clearer view of risk accumulations. With insight into their diverse set of exposures in both modeled and non-modeled regions, they are able to better manage exposure concentrations, and can help avoid private catastrophes.

Today, we announced that Mitsui Sumitomo Marine Management has chosen Exposure Manager to strengthen its risk accumulation management, taking a “big data” approach for dynamic exposure management. They are among the first in a wave of companies to adopt Exposure Manager to minimize blind spots in their risk portfolios.

Since July, we’ve been previewing some of the other solutions due out on the RMS(one) platform – from one-on-one meetings with clients leading all the way up to the main stage at Exceedance 2017 (registration is now open!). Our customers are in various stages of evaluating and adopting RMS(one) solutions and are excited to capitalize on the advantages that these solutions will bring.

As one of the many ways we are helping customers along their adoption journeys, we recently held our first Hack Event, Powered by RMS(one). Our customers in the London market attended a full-day session to understand their options, choose the right solution for their business goals, and map out adoption strategies. Due to the event’s success, we will be holding additional Hack Events in the coming months as we march toward releases for a full suite of solutions on the RMS(one) platform.

We will share more as customers continue to implement solutions on the RMS(one) platform and realize business benefits as we all work toward a common goal of building a more resilient global society.

Learn how to build portfolio intuition faster and access metrics that matter with Exposure Manager.

Understanding Risk Accumulations in Taiwan’s Science Parks

“The 6.4 magnitude Tainan earthquake in February 2016 resulted in a sizeable insured loss from the high-tech industrial risks and reminded the insurance industry of the potential threat from the risk accumulated in science parks.” (A.M. Best Special Report, Sept 2016)

Reading the sentence above you might be forgiven for wondering why science parks would give insurers and reinsurers any particular cause for concern. But consider this statistic: although Taiwan’s three major science and industrial parks occupy only 0.1% of the island’s total land mass, they represent 16% of Taiwan’s overall manufacturing – they are hugely significant, both economically and with regards to the insured exposure in Taiwan.

For example, the Hsinchu Science Park (HSP), known for semiconductor production, employs more than 150,000 people and contributes over $32 billion in revenues – approximately 6% of national GDP. By one estimate HSP represents over $319 billion in total insured values. In addition, some of the latest high tech areas within HSP, such as advanced “clean rooms,” present additional challenges due to their vulnerability to ground shaking or power interruption. The importance of this risk was observed in February’s Tainan earthquake where some significant losses to high-tech industrial risks were caused by damage to the equipment and the related business interruption due to power outage.

Improving data quality for advanced and detailed modeling is an important way to manage these risks, concludes the A.M. Best report quoted above. This is so as to accurately assess the potential loss impact on insurers’ books. RMS has already been analysing earthquake risk in Taiwan for 12 years – long before this year’s Mw 6.4 event – and in that time our view of seismic risk in Taiwan has not changed, since our model benefits from spectral response-based hazard and damage functions, that even include local liquefaction and landslide susceptibilities.

The 1999 Chi-Chi Earthquake (known in Taiwan as the 921 Earthquake) was the key event in building the RMS® Taiwan Earthquake Model in terms of the quake’s seismicity, ground motion, soil secondary effects and building response. Since then there have been no significant events to justify a re-calibration of the components of the model. In fact, the damages observed in this year’s event were broadly in line with RMS’ expectations and validated the robustness of the current model.

But although A.M. Best views the Taiwan insurance industry as prudently managed with relatively high catastrophe management capability, there are still lessons to be learnt from the 2016 event, and RMS has solutions which offer additional insight into understanding the risk posed by these business parks in Taiwan.

Concentration of Exposure into Science Parks

The RMS® Asia Industrial Clusters Catalogs were released in 2014 to identify hotspots of exposure, and profile their risk. The locations and geographic extent of the science parks within Taiwan are detailed to help understand risk accumulations for industrial lines and develop more robust risk management strategies.

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Example of industrial cluster captured in the RMS Taiwan Industrial Clusters Catalog. The red outline illustrates the digitized boundaries of the Formosa Petrochemical Co. Plant in Yunlin Hsien.

High Fragility of the Semiconductor Industry

For coding of Industrial Plants, the RMS® Industrial Facilities Model (IFM) captures the unique nature of different industrial risks, as a high percentage of property value is often associated with machinery and equipment (M&E) and stock. This advanced vulnerability model supports the earthquake model to define the damageability of a comprehensive set of industrial facilities more accurately, and calculate the financial risk to these specific types of facilities, including building, contents, and business interruption (BI) loss estimates. The IFM differentiates the risks for different types of business within the science parks, and highlights the higher fragility of semiconductor plants compared to other industrial units, as shown below.

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Lessons Learnt?

The huge damage from the 1999 Chi Chi earthquake has not halted the rapid development of Taiwan’s science parks in this seismically active area – indeed the island’s third biggest science park has since been built there. But this year’s comparatively small Mw 6.4 event further highlighted the substantial exposures concentrated within this sector, reminding the industry of the potential for significant losses without sound accumulation management practices, informed by the best modeling insights.

Earthquake Hazard: What Has New Zealand’s Kaikoura Earthquake Taught Us So Far?

The northeastern end of the South Island is a tectonically complex region with the plate motion primarily accommodated through a series of crustal faults. On November 14, as the Kaikoura earthquake shaking began, multiple faults ruptured at the same time culminating in a Mw 7.8 event (as reported by GNS Science).

The last two weeks have been busy for earthquake modelers. The paradox of our trade is that while we exist to help avoid the damage this natural phenomenon causes, the only way we can fully understand this hazard is to see it in action so that we can refine our understanding and check that our science provides the best view of risk. Since November 14 we have been looking at what Kaikoura tells us about our latest, high-definition New Zealand Earthquake model, which was designed to handle such complex events.

Multiple-Segment Ruptures

With the Kaikoura earthquake’s epicenter at the southern end of the faults identified, the rupture process moved from south to north along this series of interlinked faults (see graphic below). Multi-fault rupture is not unique to this event as the same process occurred during the 2010 Mw 7.2 Darfield Earthquake. Such ruptures are important to consider in risk modeling as they produce events of larger magnitude, and therefore affect a larger area, than individual faults would on their own.

Map showing the faults identified by GNS Sciences as experiencing surface fault rupture in the Kaikoura Earthquake.
Source: http://info.geonet.org.nz/display/quake/2016/11/16/Ruptured +land%3A+observations+from+the+air

In keeping with the latest scientific thinking, the New Zealand Earthquake HD Model provides an expanded suite of events that represent complex ruptures along multiple faults. For now, these are included only for areas of high slip fault segments in regions with exposure concentrations, but their addition increases the robustness of the tail of the Exceedance Probability curve, meaning clients get a better view of the risk of the most damaging, but lower probability events.

Landsliding and Liquefaction

While most property damage has been caused directly by shaking, infrastructure has been heavily impacted by landsliding and, to a lesser extent, liquefaction. Landslides and slumps have occurred across the region, most notably over Highway 1, an arterial route. The infrastructure impacts of the Kaikoura earthquake are a likely dress rehearsal for the expected event on the Alpine Fault. This major fault runs 600 km along the western coast of the South Island and is expected to produce an Mw 8+ event with a probability of 30% in the next 50 years, according to GNS Science.

As many as 80 – 100,000 landslides have been reported in the upper South Island, with some creating temporary dams over rivers and in some cases temporary lakes (see below). These dams can fail catastrophically, sending a sudden increase of water flow down the river.

 

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Examples of rivers blocked by landslides photographed by GNS Science researchers.

Source: http://info.geonet.org.nz/display/quake/2016/11/18/ Landslides+and+Landslide+dams+caused +by+the+Kaikoura+Earthquake

 

 

 

 

 

 

 

 

Liquefaction occurred in discrete areas across the region impacted by the Kaikoura earthquake. The Port of Wellington experienced both lateral and vertical deformation likely due to liquefaction processes in reclaimed land. There have been reports of liquefaction near the upper South Island towns (Blenheim, Seddon, Ward), but liquefaction will not be a driver of loss in the Kaikoura event to the extent it was in the Christchurch earthquake sequence.

RMS’ New Zealand Earthquake HD Model includes a new liquefaction component that was derived using the immense amount of new borehole data collected after the Canterbury Earthquake Sequence in 2010-2011. This new methodology considers additional parameters, such as depth to the groundwater table and soil-strength characteristics, that lead to better estimates of lateral and vertical displacement. The HD model is the first probabilistic model with a landslide susceptibility component for New Zealand.

Tsunami

The Kaikoura Earthquake generated tsunami waves that were observed in Kaikoura at 2.5m, Christchurch at 1m, and Wellington at 0.5m. The tsunami waves arrived in Kaikoura significantly earlier than in Christchurch and Wellington indicating that the tsunami was generated near Kaikoura. The waves were likely generated by offshore faulting, but also may be associated with submarine landsliding. Fortunately, the scale of the tsunami waves did not produce significant damage. RMS’ latest New Zealand Earthquake HD Model captures tsunami risk due to local ocean bottom deformation caused by fault rupture, and is the first model in the New Zealand market to do this, that is built from a fully hydrodynamic model.

Next Generation Earthquake Modeling at RMS

Thankfully the Kaikoura earthquake seems to have produced damage that is lower than we might have seen had it hit a more heavily populated area of New Zealand with greater exposures – for detail on damage please see my other blog on this event.

But what Kaikoura has told us is that our latest HD model offers an advanced view of risk. Released only in September 2016, it was designed to handle such a complex event as the Kaikoura earthquake, featuring multiple-segment ruptures, a new liquefaction model at very high resolution, and the first landslide susceptibility model for New Zealand.

A Perennial Debate: Disaster Planning versus Disaster Response

In May we saw a historic first: the World Humanitarian Summit. Held in Istanbul, representatives of 177 states attended. One UN chief summarised its mission thus: “a once-in-a-generation opportunity to set in motion an ambitious and far-reaching agenda to change the way that we alleviate, and most importantly prevent, the suffering of the world’s most vulnerable people.”

And in that sentence we find one of the enduring tensions within the disaster field: between “prevention” and “alleviation.” Between on the one hand reducing disaster risk through resilience-building investments, and on the other reducing suffering and loss through emergency response.

But in a world of constrained political budgets, where should we concentrate our energies and resources: disaster risk reduction or disaster response?

How to Close the Resilience Gap

The Istanbul summit saw a new global network launched to engage business in crisis situations through “pre-positioning supplies, meeting humanitarian needs and providing resources, knowledge and expertise to disaster prevention.” It is, of course, prudent to have stockpiles of humanitarian supplies strategically placed.

But is the dialogue still too focused on response? Could we not have hoped to see a greater emphasis on driving the disaster-resilient behaviours and investments, which reduce the reliance on emergency response in the first place?

Politics & Priorities

“Cost-effectiveness” is a concept with which humanitarian aid and governmental agencies have struggled over many years. But when it comes to building resilience, it is in fact possible to cost-justify the best course of action. After all, the insurance industry, piqued by the dual surprise of Hurricane Andrew and then the Northridge earthquake, has been using stochastic models to quantify and reduce catastrophe risk since the mid-1990s.

Unfortunately risk/reward analyses are rarely straightforward in practice. This is less a failing of the models to accurately characterise complex phenomena, though that certainly is a challenge. It’s more a question of politics.

It is harder for any government to argue that spending scarce public funds on building resilience in advance of a possible disaster is money well spent. By contrast, when disaster strikes and human suffering is writ large across the media, then there is a pressing political imperative to intervene. As a result many agencies sadly allocate more funds to disaster response than to disaster prevention, even though the analytics mostly suggest the opposite would be more beneficial.

A New, Ambitious form of Public Private Partnership

But there are signs that across the different strata of government the mood is changing. The cities of San Francisco and Berkeley, for example, have begun to use catastrophe models to quantify the cost of inaction and thereby drive risk-reducing investments. For San Francisco the focus has been on protecting the city’s economic and social wealth from future sea level rise. In Berkeley, resilience models have been deployed to shore-up critical infrastructure against the threat of earthquakes.

In May, RMS held the first international workshop on how resilience analytics can be used to manage urban resilience. Attended by public officials from several continents the engagement in the topic was very high.

The role of resilience analytics to help design, implement, and measure resilience strategies was emphasized by Arnoldo Kramer, the first Chief Resilience Officer (CRO) of the largest city in the western hemisphere, Mexico City. The workshop discussion went further than just explaining how these models can be used to quantify the potential, risk-adjusted return on investment from resilience initiatives. The group stressed the role of resilience metrics in helping cities finance capital investments in new, protective infrastructure.

Stimulated by commitments under the Sendai Framework to work more closely with the private sector, lower income regions are also increasingly benefiting from such techniques – not just to inform disaster response, but also to finance the reduction of disaster risk in the first place. Indeed there are encouraging signs that these two different worlds are beginning to understand each other better. At the inaugural working group meeting of the Insurance Development Forum in Singapore last month there was a productive dialogue between the UN Development Programme and the risk transfer industry. It was clear that both sides wanted action, not just words.

Such initiatives can only serve to accelerate the incorporation of resilience analytics into existing disaster risk reduction programmes. This may be a once-in-a-generation opportunity to address the shameful gap between the economic costs of natural disasters and the fraction of those costs that are insured.

We cannot prevent natural disasters from happening. But neither can we continue to afford to spend billions of dollars picking up the pieces when they strike. I am hopeful that we will take this opportunity to bring resilience analytics into under-served societies, making them tougher, more resilient, so that when catastrophe strikes, the impact is lessened and societies can bounce back far more readily.

Exceedance 2016: Welcome Back to Miami!

We are back in sunny Miami, FL for Exceedance 2016 and ready for a week of engaging sessions, invigorating discussion, and plenty of networking opportunities.

If you’re joining us again here at the Fontainebleau Hotel, meet us in the Fleur De Lis Ballroom tonight at 5:30 p.m. for the Welcome Reception. If you were unable to make it this year, follow the highlights as we share on Twitter and LinkedIn, and here on the RMS Blog for #Exceedance news, insights, and photos.

Over the course of three days we have more than 60 sessions across six different tracks, so there is no shortage of thought-provoking content and discussions to be had. Download the mobile app to help you manage your schedule and maximize your week.

Here are a few highlights as you plan out your week:

This year, our lineup of keynote speakers includes:

  • Professor Bruce Hoffman, terrorism and security expert
  • Tim Jarvis, environmental scientist, author, adventurer
  • Matt Olsen, a president and co-founder, IronNet Cybersecurity
  • Hemant Shah, RMS Co-founder and CEO
  • Robert Muir-Wood, RMS Chief Research Officer
  • Emily Paterson, RMS Event Response Lead
  • Mark Powell, VP and Founder, HWind
  • Emily Grover-Kopec, VP, Model Product Strategy
  • Arno Hilberts, Senior Director, Global Flood Models
  • Shree Khare, Senior Director, Asia Models
  • Chris Folkman, Director, Marine and Terrorism Models
  • Tom Harvey, Product Manager, Cyber Models

The Lab: During breakfast and lunch, be sure to stop by The Lab to meet RMS experts and learn latest about RiskAssessor, RiskLink® version 16, Hosting Plus, and much more. Looking for some hands-on exercise? Join us to assemble 50 partially built bikes for donation to several Miami-based charities.

“EP” – The Exceedance Party: This year’s EP will be a vision in white, inspired by retro Miami and Fontainebleau’s heyday. Join us in Glimmer Ballroom to show off your dance moves to a five-piece band and DJ while enjoying specialty cocktails, lively conversations, delicious bites, a candy bar, photo booth, and more!

We’re excited to see you in Miami and are looking forward to a great week ahead!